New Michigan Legislature's early agenda depends on May vote

If voters in May approve a sales tax increase as part of a broader plan to help better fund roads, the GOP could decide there's enough budget cushion to push an income tax cut even if the idea doesn't excite the Republican governor.

Republicans with bolstered majorities in the Legislature will commence a two-year session with the familiar routine of swearings-in, Gov. Rick Snyder's State of the State address and his budget proposal.

But it's an unpredictable event — four months away — on which much of their still-forming agenda could hinge early on.

If voters in May approve a sales tax increase as part of a broader plan to help better fund roads, the GOP could decide there's enough budget cushion to push an income tax cut even if the idea doesn't excite the Republican governor. If the 1 percentage point sales tax hike is rejected, lawmakers will be forced back to the drawing board to consider alternatives for boosting transportation spending — if the appetite even remains to fix deteriorating roads.

"The May 5 ballot proposal on roads is going to be the lens through which everything gets done in the first six months. It has so many implications in it that are budgetary implications," said Ken Sikkema, a former Senate majority leader who is a senior policy fellow with Public Sector Consultants in Lansing.

He said the statewide vote is "the 800-pound gorilla" in part because it's tied to such a wide-ranging package of bills Snyder plans to sign any day. The plan would restructure and ultimately raise Michigan's gasoline and diesel taxes, boost transportation and school funding, restore a tax credit for low-wage earners, eliminate the sales tax on fuel, stop the diversion of school aid revenue to public universities and no longer let vehicle registration fees drop in the three years after a new car is bought.

Three of the four legislative leaders who brokered the bipartisan transportation funding deal with Snyder in December have since left office under term limits. When legislators are sworn in Wednesday, Republicans will have expanded 63-47 and 27-11 edges in the House and Senate.

Forty-three lawmakers are entirely new to the 148-member Legislature. Another 10 are senators promoted from the House.

Analysts have suggested the 98th Legislature will be more conservative, not only because of the larger GOP majorities but also since a few new House Republicans have aggressively pushed social issues or criticized Snyder and GOP leaders as being too liberal.

New House Speaker Kevin Cotter of Mount Pleasant said it's premature to say if his caucus will move to the right.

"We'll see how things go and allow everyone to settle in. I'm excited we have a very diverse caucus, a very diverse body in a lot of ways," Cotter said.

When Snyder and Republicans took control of state government four years ago, they enacted a conservative agenda of business tax cuts, right-to-work laws, toughened emergency manager measures and changes to public workers' retirement benefits. In the session that just ended, Republicans joined with Democrats to pass major laws that drew opposition from the GOP's right wing: Medicaid expansion, a state bailout to help end Detroit's bankruptcy and the proposed road-funding tax hikes.

Both Cotter and new Senate Majority Leader Arlan Meekhof of West Olive have been guarded in detailing their plans, waiting until agendas are crafted by their caucuses' policy workgroups.

Sikkema said it will be tough for Snyder and majority Republicans to replicate the last four years, especially the 2011-12 session.

"The low-hanging fruit's been picked already," he said. "It's very hard to come up with new ideas."

Snyder, who will deliver his State of the State on Jan. 20 and a budget proposal in early February, is expected to detail plans to boost training for skilled trade jobs that don't require a four-year degree and to improve public schools and make them more transparent.

The education proposal could be substantial and will be closely watched. Legislators last session resisted bills to hold back third-graders not proficient in reading, revamp school ranking and teacher evaluation systems, and detect financial problems in districts earlier.

Snyder's attempt to codify or expand the state's turnaround district for poor-performing schools also stalled. The reform district's exclusive contract with the Education Achievement Authority in Detroit expires next month, and the term of the Detroit school district's state emergency manager is set to end within days.

"If the governor continues to push that failed (EAA) plan, we're going to oppose him every step of the way. If on the other hand he looks to models that have proven successful in other parts of the country and that will actually improve student success, we will be very supportive," said House Minority Leader Tim Greimel of Auburn Hills.

He said Democrats, who insisted that the tax credit for low-income workers be fully reinstated as part of the road funding deal, will keep pushing Republicans to make charter schools transparent to fully restore tax breaks for homeowners and pensioners. Snyder's own tax relief proposal died last year after he and lawmakers decided to direct more money to roads and budget estimates proved less rosy than initially projected.

His administration and legislative economists will meet Friday to settle on revised revenue projections that likely will be lower than anticipated in May, in part because businesses cashed in more old tax credits than expected.